The global interest in renewable energy shows no signs of slowing down. If recent reports are any indication, Chevron (NYSE:CVX) shares the desire to embrace a more sustainable future. The oil conglomerate recently announced a partnership with renewable energy provider Gevo (NASDAQ:GEVO), and GEVO stock is reacting well.
What Happened With GEVO Stock
Gevo’s commitment to “commercializing the next generation of renewable gasoline, jet fuel and diesel fuel” has garnered quite a bit of social media attention.
The letter of intent released today details a plan for a joint partnership between the two companies to build and operate one or more facilities where inedible corn would be processed to produce sustainable aviation fuel. As a result, GEVO stock is up nearly 35% on the day as of this writing.
Prior to the announcement, the stock has spent the previous week gradually decreasing by as much as 6%. The news of the day spiked an immediate turnaround, sending the stock straight up into the green. This past summer saw GEVO stock added to the Russell 3000.
Why It Matters
As of now, Gevo and Chevron’s plan is to build “one or more” manufacturing facilities. When we consider what just the announcement of the plan for one facility did for the GEVO stock, though, it is clear that the company has the potential to soar much higher if further facilities are built.
There is good reason to suggest that this will be the case. The need for sustainable energy is only increasing, but scientific developments are enabling more companies to step up and fill needs such as this. To invest this much in the production of a sustainable aviation fuel made from agricultural waste, these two companies must firmly believe in the technology.
Sustainable fuel is one of today’s most pressing needs. The ability to manufacture it from something that can be grown has the potential to change how energy is processed, a feat that would affect many sectors if achieved.
It also should be noted that one of America’s largest oil providers has made the decision to throw its hat into the sustainable fuel ring. If Chevron wants to be a part of the renewable energy revolution, others will follow.
What Comes Next for Gevo?
With all this in mind, it is hardly surprising that GEVO stock was quick to begin shooting upward. Green may be the color associated with renewable energy, but it will also be the color associated with publicly traded companies in the sector if these trends continue.
We are currently witnessing a boom in the electric vehicles market, also a product of the need to adapt to a more sustainable future, but even companies like Tesla (NASDAQ:TSLA) and Lucid Motors (NASDAQ:LCID) can’t keep us moving on their own.
The type of sustainable fuel that Gevo and Chevron are about to start producing is exactly what is needed. Their stock for this green company is poised to stay there for the foreseeable future and similar companies that throw their hats into this ring are likely to follow suit.
In the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
